FOR IMMEDIATE RELEASE

CONTACT: Susan Nolan

Candace Thorson

NCOIL National Office

518-687-0178

NCOIL EXAMINES BROKER DISCLOSURE OPTIONS

Hilton Head, South Carolina, February 25, 2005¾Legislators will examine options to address broker compensation and disclosure concerns during a National Conference of Insurance Legislators’ (NCOIL) general session scheduled here on Saturday, March 5. The discussion, entitled Broker Compensation: Impact on the Insurance Market, immediately will be followed by a special meeting of the NCOIL Executive and State-Federal Relations Committees. At that time, state lawmakers will consider proposals for future NCOIL action.

The panel discussion, scheduled from 9:45 to 11:45 a.m. during the March 3 through 6 NCOIL Spring Meeting, will approach the issue in two parts. The first group of speakers will be led by an academic, who will overview the various ways that insurance producers are compensated. Subsequent panelists will speak to proposals aimed at addressing the broker antitrust and fraud violations exposed when NYS Attorney General Eliot Spitzer began investigating broker compensation practices last year.

The second panel will focus on interested-party responses to proposals for reform, particularly in light of the dynamics of producer compensation systems. Representatives of the agent, broker, property-casualty, life, and health insurance industries will participate.

Legislators convened during the special NCOIL Executive/State-Federal Relations Committee meeting will consider whether to pursue a draft NCOIL Insurance Broker Fiduciary Duty and Conflict of Interest Model Act that was first vetted during the November 2004 NCOIL Annual Meeting. Alternatively, the Committees may choose to support an amendment that the National Association of Insurance Commissioners (NAIC) adopted in December 2004 to its Producer Licensing Model Act. In general, that amendment would require brokers to disclose information regarding any compensation they receive from insurers prior to placing insurance.

Rep. Craig Eiland (TX), NCOIL president, will propose adopting the NAIC amendment and perhaps adding a drafting note. Issues that NCOIL may address could include items that the NAIC deferred in December in order to allow for additional discussion. Those issues include establishment of a fiduciary duty between a broker and his or her client; disclosure of all quotes a broker receives; and disclosure of agent-owned reinsurance arrangements. The NAIC also deferred language, proposed last year, that would mandate various other disclosures regarding broker compensation, including the fact that additional income received from an insurer may be based on the claims/loss experience of the policies in force, as well as on the premium volume placed with a carrier.

NCOIL has delayed action on its November 2004 proposed model act in order to monitor NAIC activity in hopes of addressing the issue uniformly. A Steering Committee, comprised of NCOIL officers and committee chairs, has said that the adopted NAIC amendments represent a good start, but that more is needed.

Confirmed panelists on the March 5 general session include: Laureen Regan of Temple University; Acting Director Deirdre Manna of the Illinois Insurance Department; Wes Bissett of the Independent Insurance Agents & Brokers of America; Scott Sinder of the Council of Insurance Agents Brokers; Stef Zielezienski of the American Insurance Association; Robert Zeman of the Property Casualty Insurance Association of America; Bruce Ferguson of the American Council of Life Insurers; Bill Anderson of the National Association of Insurance & Financial Advisors; and Russ Childers of the National Association of Health Underwriters.

The NCOIL Spring Meeting will be held at the Hilton Oceanfront Resort in Hilton Head, South Carolina.

NCOIL is an organization of state legislators interested in insurance legislation and regulation. Many legislators active in NCOIL either chair or are members of the committees responsible for insurance legislation in their respective state houses across the country.

A copy of the proposed NCOIL Insurance Broker Fiduciary Duty and Conflict of Interest Model Act is available on the NCOIL Web site at www.ncoil.org.

For more information, please contact the NCOIL National Office at 518-687-0178.

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